[Management View]
Lowe's reported Q1 FY2025 revenue of $20.9 billion, with comparable sales down 1.7%, aligning with internal projections. Key strategic priorities included the expansion of the online marketplace, the launch of the AI-powered virtual advisor "Milo," and the acquisition of Artisan Design Group to enhance pro sales.

[Outlook]
Lowe's affirmed its FY2025 guidance with expected sales of $83.5-$84.5 billion, comparable sales flat to up 1%, and an operating margin of 12.3%-12.4%. The company anticipates a modest recovery in discretionary spending, supported by strong in-stock positions and supply chain readiness.

[Financial Performance]
Q1 FY2025 saw a 6% increase in online sales and mid-single-digit growth in pro sales. Gross margin improved to 33.4%, up 19 basis points YoY, while SG&A expenses delevered by 56 basis points to 19.3% of sales. Operating margin stood at 11.9%.

[Q&A Highlights]
Question 1: On the relationship of comp to expense leverage or operating leverage for the rest of the year.
Answer: Brandon Sink explained that the first half is mainly a weather story, expecting roughly flat comps. The second half implies a plus one, driven by the total home strategy and offsetting hurricane pressure. Gross margins are expected to hold roughly flat for the full year.

Question 2: On the larger pro and Artisan Design Group acquisition.
Answer: Marvin Ellison emphasized the disciplined capital management and the strategic fit of ADG in the pro segment. ADG is expected to benefit from the recovery in housing over the next decade, with potential for further acquisitions in a fragmented market.

Question 3: On the percentage of transactions being spring-related and the impact on Q1 and Q2.
Answer: Brandon Sink noted that Q1 average ticket was up 2.1%, driven by pro and appliances, with fewer smaller ticket seasonal transactions. Q2 is expected to see transaction recovery as the business gains momentum.

Question 4: On the localization strategy and its progress.
Answer: Bill Boltz highlighted the ongoing initiatives in rural, workwear, and pet categories, with significant progress expected by the end of the year.

Question 5: On tariffs and pricing impacts.
Answer: Marvin Ellison and Bill Boltz discussed the portfolio approach to pricing and the efforts to diversify global sourcing, with 60% of purchases from the US and 20% from China.

Question 6: On the potential of the marketplace initiative.
Answer: Marvin Ellison expressed high expectations for the marketplace, leveraging the partnership with Miracle to manage premium and value products without additional inventory investment.

Question 7: On the impact of weather on pro sales.
Answer: Marvin Ellison confirmed that weather impacted Q1, with business performance improving as weather normalized.

Question 8: On the potential for further acquisitions following ADG.
Answer: Marvin Ellison stated that Lowe's would remain opportunistic, focusing on acquisitions that complement the total home strategy.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on strategic initiatives and growth opportunities. Management expressed confidence in navigating macroeconomic challenges and leveraging technology and acquisitions to drive growth.

[Quarterly Comparison]
| Metric | Q1 FY2025 | Q1 FY2024 |
|-----------------------|-----------|-----------|
| Revenue | $20.9B | $21.1B |
| Comparable Sales | -1.7% | -1.5% |
| Gross Margin | 33.4% | 33.2% |
| SG&A Expense | 19.3% | 18.7% |
| Operating Margin | 11.9% | 12.0% |
| Free Cash Flow | $2.9B | $2.8B |

[Risks and Concerns]
Key risks include ongoing pressure in DIY discretionary demand, elevated mortgage rates affecting big-ticket purchases, and potential impacts from trade policies and tariffs.

[Final Takeaway]
Lowe's Q1 FY2025 performance was in line with expectations, driven by strategic initiatives in AI integration, online marketplace expansion, and pro sales growth. The acquisition of Artisan Design Group positions Lowe's to capitalize on the recovery in the housing market. Despite macroeconomic challenges, Lowe's remains focused on delivering value through disciplined capital management and innovative customer solutions.